Retirement tax puts undue burden senior citizens

I respectfully disagree with Chad Selweski, who in a recent editorial, argued that the retirement tax approved by Gov. Snyder and the Republican Legislature is good public policy. The tax issue is ultimately, as the governor said, a matter of fairness. Whether the retirement tax is good or bad public policy must be considered in the context of the governorís budget priorities. What is this new tax paying for? Who is really benefiting from it? Would the money have been better spent if it remained in the pockets of those who earned it? It would.

According to May 2013 Consensus Revenue Estimates, since the governorís tax plan took effect through this fiscal year, the state is projected to have taxed retirement income by $925 million. Over that same time frame, using the amount of revenue the state collected from business specific taxes the fiscal year immediately preceding the tax changes, corporations and big businesses have seen their taxes cut by $3.835 billion. Part of the budget hole that the governor was faced with was self-imposed. The governor claimed his corporate tax cut would create jobs, but there is no evidence that the $3.835 billion dollar giveaway to corporations and big businesses has created a single job. Michigan still has the fourth highest unemployment rate in the country, which is almost 2 percent higher than the rest of the nation. In fact, according to the governorís own dashboard, the rate of annual job creation has actually declined since the Governorís tax increases and corporate giveaway took effect. Could the money have been spent a better way? Again, I argue yes.

The money would have been better spent by those who earned it and who would have spent it locally, supporting their local communities and small businesses. Consumer spending drives about 70 percent of the economy.

As stated before, the issue is here is fairness. The retirement tax changed the rules on many retirees. Retirees born after 1946 have an unexpected tax bill, and those born after 1952 have an even bigger tax bill. Under the retirement tax, pensions and other retirement income are taxed at a rate of 4.25 percent. Younger retirees also pay more because there are no income exemptions until they hit age 67. Discriminating against taxpayers based on age is fundamentally unfair.

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That being said, over the past couple years, while talking to my constituents, going door to door, meeting them at my coffee hours, or various district events, I am struck by their selflessness and their commitment to their state and local community. People donít mind paying their fair share when they know the money is being used efficiently and wisely to fund education, create jobs, fix the roads, or to keep their children and their communities safe. What they donít want is a corporate giveaway with no proven results.

Our seniors deserve tax relief, not higher taxes. Bills donít stop coming and prices for things like food and gas donít drop when you retire. This retirement tax has imposed a burden for retirees who have limited, if any, job opportunities to recoup that money they are now paying out in taxes, and with little to show for it. This is why I am a cosponsor of House Bill 4564 and working hard to eliminate the retirement tax.

Henry Yanez is the state representative for Michiganís 25th district and lives in Sterling Heights.